You may have to spend your money in different ways once your new bundle of joy comes along. But a little planning can help you maintain financial security as your family grows.

Denise Dorman has a two-word explanation for why she didn't do much financial planning before the birth of her son, Jack, and it's not “morning sickness.” “Hurricane Ivan,” she says.

Denise and her husband, Dave, had half of their home destroyed in September 2004, a month before she was due. “So we just sort of winged it,” Mrs. Dorman says. “Budgeting? At that point, we didn't.” after a near-miss from Hurricane Dennis the following summer, the couple moved from Florida to hurricane-free Geneva, Ill. But Mrs. Dorman, a public relations consultant, and her husband, an artist, still struggle with postpartum finances. The biggest shock: day-care costs. “It's much more expensive than we thought it would be,” Mrs. Dorman says.

Most couples can't claim a hurricane as an excuse for not planning. Even if parents try, it's though to come up with an actual figure for what they'll spend on each new baby. The U.S. Department of Agriculture estimates raising a child from birth through age 17 costs the typical middle-income, two-child family $197,700 in 2006 dollars, the most recent numbers available.

Diapers and day care are just the beginning. Expectant parents also must budget for life insurance – the foundation of any financial plan. And they should begin thinking about saving for their child's college tuition, without compromising retirement savings. Whew. Now, that's a lot to consider.

But take a deep breath. A few smart steps can get your finances in order and let you concentrate on your little one.

A trial run
Long before the due date, take a good look at how your baby will affect everyday living expenses. If you and your mate are unfamiliar with the price of day gowns and diapers, stroll through a baby store or two – and take notes.

Paying for the convenience of disposable diapers instead of cloth may be worth it to you, but expect to spend a total of $1,500 to $2,000 until your child is potty-trained, according to Consumer Reports. The cost of formula, if you use it, adds up quickly, too. “Store-brand formula is almost identical to brand-name, but half the cost,” says financial planner Sean Sebold.

Next, redo your annual budget to include the new line items. That exercise can help you figure out if you need to cut spending in other areas.

If one parent is thinking of leaving the workplace to care for the baby at home, experiment with living on one income to see how feasible it is. “See what it feels likes – the earlier the better,” says financial planner Dianne Nolin. Sock the second income into savings for child-related expenses.

Baby-clothes bonanza
It's fun to buy new hoodies and onesies, but the Financial Planning Association recommends investigating hand-me-downs, consignment shops and garage sales. Mrs. Dorman is a regular on eBay, where she finds box loads of gently used, quality children's clothes for a few dollars.

Ask gift-givers for items you really need, Ms. Nolin suggests. Otherwise, you're likely to be overwhelmed with newborn outfits that are outgrown in a few weeks.

House notes
Beyond expenses for the crib and any decorating you might want to do in the nursery or other kids' rooms, think twice before buying a new home for your growing family. You may find yourself baby-rich and house-poor like Lisa and Luis Rivero.

The 32-year-old professionals rented an upscale but affordable apartment in downtown Boston before buying a home in Ipswich, Mass., a few weeks after their first child was born. Unexpected repairs and maintenance more than stole the savings on day care that motivated the move. “Now we live paycheck to paycheck,” Mrs. Rivero says.

You can save on housing by moving, but not necessarily to heavily populated areas in the Northeast or out West. Child-rearing costs are lowest in the Midwest and South, according to the U.S. Department of Agriculture, largely because of lower housing expenses.

Not moving at all might have been better, at least for a while. Mrs. Rivero wishes they had rented for another year.

Hot wheels
Contrary to the misguided thinking of many expectant parents, you don't really need a minivan or sport utility vehicle to parent properly. Mrs. Rivero regrets trading her paid-for sedan for a luxury SUV just before gas prices soared. “I would return it to the dealer in a heartbeat,” she says.

Day-care solutions
Perhaps the most meaningful financial assistance grandparents, other relatives, and friends can give is volunteering to baby-sit. “That's very helpful, particularly when the baby's young,” says Park Ridge, Ill. financial planner Terry Gaertner. “You have to develop some sort of support system for baby care.”

For those without such a system, here's a tip from the Financial Planning Association: If your employer offers a flexible spending account, you may be able to use it to pay for up to $5,000 in child-care expenses a year using money exempt from income taxes.

Bye-bye to brand names
Perhaps you can afford that designer diaper bag, but if it's a stretch, one from the discount store might have to do.

Your baby won't know the difference between top-of-the-line baby blankets and less expensive, quality ones that feel just as snuggly.

Look ahead to higher education
If you start planning for college in the delivery room, you won't be jumping the gun, Ms. Nolin says.

The College Board estimated that the average cost of tuition and fees for the 2006-07 school year was $5,836 for a public college, up 6.3 percent from the previous year, and $22,218 for a private college, up 5.9 percent from the previous year. By the time your baby is a freshman, who knows what tuition, board and books will cost?

Financial aid and part-time jobs may help your child pay for college, but if you want to contribute, experts suggest 529 college savings plans and Coverdell educational savings accounts.

For now, college is far from Mrs. Dorman's mind. But the good news is that the financial sacrifice, even the day-care cost, is worth it. “My son is thriving,” she says.

The preceding discussion is not tax or legal advice. Consult your tax or legal professional regarding your specific situation.

About USAAUSAA, a diversified financial services company, is the leading provider of competitively priced financial planning, insurance, investments, and banking products to members of the U.S. military and their families. Named by BusinessWeek as 2007's Customer Service Champion and ranked highest among financial services companies for customer advocacy in a Forrester Research survey, USAA provides convenient and accessible financial products to its more than 6 million members. For more information about USAA, or to learn more about membership, visit usaa.com. USAA, a diversified financial services company, is the leading provider of competitively priced insurance, investments, and banking products to members of the U.S. military and their families. The company's 5 million members around the world rely on the convenience and accessibility of USAA's financial products, backed by industry-leading service. For more information about USAA's products and services, or to learn more about membership, visit usaa.com. Some USAA products and services are available to the public. USAA means United Services Automobile Association and its affiliates.

SIDEBAR 1:Gifts from Grandparents
Beyond the gift of baby-sitting, grandparents with dollars to share can ease college costs by funding tax-deferred 529 college savings plans, suggests financial planner Terry Gaertner. Under current rules, grandparents could even front-load 529 contributions by putting in up to five years of the maximum annual amount, currently $12,000, without incurring gift taxes* - that's $60,000. “So they could, between the two, put in $120,000 in one year without incurring any gift tax,” Mr. Gaertner explains. Don't have that kind of money? Whatever you give now will be an investment and can grow over time.

*Subject to add-back rule if contributor dies within five years of giving gift.

Look at life insurance. For parents, it's essential and much more affordable than you might think. You'll also get better rates when you're young. Talk to your life insurance company about what amount will give your family the best protection, and don't leave your loved ones in the lurch.

Update your will and appoint a guardian. Sean Sebold, an Illinois financial planner, recommends naming a contingent guardian and updating the will in case the primary guardian's status changes. Otherwise, a judge might have to appoint someone you've never met to raise your kids.

Take advantage of tax savings. The Internal Revenue Service allows an exemption for every new dependent and also grants child credits currently worth $1,000 per child younger than age 17. The earned income tax credit can save on taxes for parents whose income qualifies them. And parents who have to work and pay for day care can take advantage of a child-care credit.

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